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The Potential Cost Of Waiting For 'The Bottom"
I love this chart that the Zillow research team put together which illustrates how it could actually cost money to wait for another small decrease in home prices, based on the projected interest rate increases.
You can read the full article here, entitled, To Wait or Not to Wait: Financing versus Purchase Costs.
The article uses the example of buying a $200,000 home now, verses waiting a year.  In the first week of February 2011, the Zillow Mortgage Marketplace was showing a 30-year fixed rate mortgage at 4.7%. For someone with good credit, who is able to put 20% down, and locks a 4.7% rate on a 30-year fixed rate mortgage, the monthly payment would be $830.
Say this same person waits, believing values may fall another 6% in a year (so paying $188,000 for this same home).  It is projected that the 30-year fixed mortgage will be at 5.2% by  Freddie Mac's forecasted average for 2011.  Now the actual monthly payment goes to $826 with a 20% down payment. That $12,000 savings achieved by waiting to buy later at a lower price translates to just $4 a month less in a mortgage payment, as much of the savings is offset by higher mortgage rates. Also, this ... more

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